The Congressional Budget Office released its updated analysis of the American Health Care Act (AHCA), giving Democrats new ammunition to attack the bill and making some Republicans even more nervous about the consequences of healthcare reform in the 2018 midterm elections. But given what the CBO said about the bill, it’s clear that very little has changed since the first report in March.
In its first report, the CBO said that 24 million people might be left without insurance coverage. The May 24 update changed that number to 23 million. The March estimate said that the deficit would be reduced by about $150 billion over 10 years, while the May report lowered the savings to $119 billion. The substance of the CBO analysis remained almost the same.
But that didn’t stop left-leaning members of the media and Democrats from jumping all over the new report and calling for the AHCA to be scrapped. The 23 million number was everywhere in the press, as though it was a surprise. Democratic lawmakers also repeated calls for Republicans to fix the Affordable Care Act instead of proceeding with “Trumpcare.”
Republicans aren’t going to “fix” Obamacare. They have no ideological or political reason to do so. The GOP retook the House in 2010 primarily on the strength of the voters’ anger over the ACA. They retook the Senate in 2014 and held it in 2016 with ACA repeal at the top of their campaign agendas. It is disingenuous for Democrats and commentators to act as though tweaking the ACA to extend its lifespan is a viable policy alternative. If that is what voters wanted, then why did they vote Republican to begin with?
Republicans are much more interested in responding to voter anger over the costs of healthcare than they are in ensuring 100 percent of Americans have healthcare. The GOP hopes that the AHCA brings down premiums and gives people more choice in what types of plans they can buy. And it almost certainly will do that. It is also true that the AHCA will make it much more difficult for many people to find health insurance. There is no magic bullet that can lower costs and expand coverage (other than, perhaps, single-payer, but neither party is likely to support that soon).
So, keeping in mind that the GOP isn’t likely to pass an ACA technical corrections act, what does the CBO report say about the fate of the Obamacare taxes? The AHCA is a $662 billion tax cut, according to the CBO. The AHCA eliminates the 3.8 percent net investment income tax (which primarily affects high-wealth taxpayers with capital gains). It also repeals the ACA’s fees for insurance providers and reduces the floor for the healthcare deduction to 5.8 percent of gross income. Smaller items include a repeal of the tanning booth tax and the medical device excise tax. The controversial tax on so-called Cadillac insurance plans would remain, but its effective date would once again be postponed. (As an aside, there is very little chance this tax will ever go into effect, even if Democrats return to power.)
The Senate will heavily modify the AHCA. They will probably change the House’s changes to preexisting conditions. Some GOP senators have expressed support for keeping ACA pay-fors, but that is unlikely given the stance of Finance Committee Chair Orrin Hatch and Majority Leader Mitch McConnell.
The CBO report is important because it now allows the Senate to proceed and make the AHCA comply with reconciliation. But nothing in the report is likely to change how voters perceive the ACA or how Republicans proceed on healthcare reform.